Turkish rockets cry after Erdogan’s promise to protect deposits | Business and Economic Affairs

The Turkish lira has gained momentum after the Turkish president unveiled a plan to ensure that the local currency will be kept against market fluctuations.

The Turkish Lira has achieved a great deal after the president announced on Tuesday new measures to protect the country’s currency from fluctuations.

Lira hit with always low of 18.36 against the US dollar on Monday but rose again to 11.09 Tuesday morning. It sells at 13.75 around 08:20 GMT.

The currency has been thriving since the central bank began lowering interest rates in September and has seen significant instability in recent weeks when the bell hit several records.

In a statement at the end of Monday, President Recep Tayyip Erdogan said the government would provide for the losses of those who have lost a lira deposit as a result of the depreciation of the lira against foreign currency beyond bank interest rates.

“From now on, our citizens will no longer need to change their deposits from the Turkish lira to foreign currency, for fear that the exchange rate will rise,” he said.

The surprising move seeks to boost the confidence of the Turkish people in their finances after many flocked to foreign exchange and gold to maintain their savings in the wake of the dramatic change and rising consumer prices.

The weak cry was very high prices, making foreign goods, oil and daily necessities more expensive.

The Turkish president knows against high interest rates and are believed to lead to higher inflation, a concept that differs from established economic norms.

The central bank has reduced interest rates by 5 percent from September to 14 percent, although inflation has dropped by 21 percent.

Erdogan also promised foreign investors on Monday that they would receive foreign currency from the central bank to reduce the risk of a collapse, and increase government subsidies on special pensions from 25 percent to 30 percent.

On Monday a record low of 18.36, the Turkish currency lost more than 60 percent of its value against the dollar this year. The president of the Turkey Banks Association, Alpaslan Cakar, told Turkish journalist Haberturk late Monday that $ 1bn had already been converted into lire after Erdogan’s announcement.

‘Dangerous consequences’

Opponents say Erdogan’s plans are unstable and could lead to a rise in prices.

Some economists have argued that the new measures are price inflation that will not stop the sale of the stock, while undermining the Treasury’s backlog.

“It could be dangerous,” said Refet Gurkaynak, dean of the department of finance at Bilkent University, Ankara.

Jeffrey Halley, a market analyst for Asia Pacific, OANDA, said it was still unclear how the government would react to the new developments.

“The Turkish lira … had the mothers of all the meetings at night, down 11 percent intraday, but ended the night with more than 20 percent after President Erdogan announced new ways to save money,” Halley said.

“Seeing these new methods left me worried about how they would be set up and executed, especially in the short term.”